Issue date: June 24, 1998

Arjay Miller: Former president of Ford and dean of Stanford Business School focuses on "big picture" issues, including campaign finance reform

Looking out the picture window of his spacious living room at his Indian sculptures in the dappled sunlight under spreading oaks, Mr. Miller doesn't waste much time on small talk. He'd rather address the issues of the times, and what needs to be done. His voice still carries the twang from his boyhood on a Nebraska farm. He speaks briefly, cogently, with the clarity of a prairie sky.

Mr. Miller has come a long way from that Nebraska farm. When he was studying for a Ph.D. in economics at "Cal," the University of California at Berkeley, he met and married a fellow graduate student in economics. Arjay and Frances Miller will celebrate their 58th wedding anniversary in August. They have a son and daughter who still live in the area, and three grand-daughters. "Family is still very important in my life," Mr. Miller says.

The first big turning point in Mr. Miller's life came in 1945. Drafted as a private during World War II, he rose to captain and was working in the Pentagon as a statistical control officer at Air Force headquarters. His group was charged with keeping track of the logistics of air operations, from pilots and airplanes to bombs and training, all without the help of a computer.

As the war wound down, he and a group of 10 officers under the leadership of Col. "Tex" Thornton, who later founded Lytton Industries, decided to go as a group to some company that needed managerial help. Mr. Miller wasn't so interested when the group was looking at the Illinois Central Railroad, but when its focus shifted to Ford, he gave up his plans to return to banking and a Ph.D. in San Francisco and went along.

The rest is history. The 10 so-called "Whiz Kids" turned the limping company around and built it into one of the world powerhouses. Best known of the 10 was Robert McNamara, who went from being president of Ford to secretary of defense and then chief of the World Bank.

Mr. Miller rose through the ranks to become president of Ford in 1963. He stayed until 1969 when he left to become dean of the Stanford Business School. He's still a consultant for Ford and takes pride that Ford is No. 2 in revenues of all American companies after General Motors, and No. 1 in profits, with $6.7 billion last year. "I've been on the Ford payroll for 52 years," he says.

The turbulent '60s gave Mr. Miller a crash course in urban problems, the environment, and the limits of business. First it was the Detroit riots. In trying to help out afterward, Mr. Miller recalls: "I found out the mayor of Detroit had a tougher problem than I had as president of Ford. He was short of money, short of time, and short of qualified people. We really didn't know how to help him."

The second tough lesson came when Ralph Nader published his groundbreaking book, "Unsafe at Any Speed," blasting the American auto industry. Mr. Miller still winces at his memory of the presidents of the three auto companies being called to testify before Congress. "We were just lost -- out of our element. We were whipsawed," he says.

Then came the Clean Air Act. "We tried to lobby. When the vote came in the Senate, we didn't get a single vote." Mr. Miller now admits, "The auto industry was wrong in safety and in polluting the air."

These lessons taught Mr. Miller that business needed to know more about the public sector and vice versa, so they could work better together. He moved to Stanford on condition he could start a public management school within the School of Business. He had already become the first president of the Urban Institute, an idea launched by President Johnson to address urban problems.

Almost 20 years after he left as dean, the public management program is still alive and well. "An MBA coming out of Stanford will have an understanding of the political process: how government works and how business should interact with government," he says. "These subjects can be studied and they can be understood."

These people will also be able to switch careers between the public and private sector, and they will know people on the other side, Mr. Miller says. "It helps to have a relationship of trust between people you know."

Campaign finance reform

Reforming the obscene way that money drives elections and legislation is a special passion with Mr. Miller. "I think it's desperately, desperately needed," he says.

He still hopes that an extra push from the public, and from the majority of the House and Senate that support campaign finance reform, will bring it to a vote in both houses. So far the McCain-Feingold bill has been filibustered in the Senate. The House leadership, which was forced to bring it up for discussion, is now trying to kill the equivalent bill by introducing unlimited amendments, Mr. Miller explains. He waves an editorial from the June 8 New York Times deploring "G.O.P. trickery in the House."

The McCain Feingold Bill in the Senate and the Shays-Meehan bill in the House would do three key things, Mr. Miller explains. Most important, they would ban "soft money" -- "That's money to the party, but really is used to bolster candidates," he says.

Second, Mr. Miller says, the bills would require immediate disclosure of all contributions. "We need visibility of who's giving the money. Put them on the air the next day," he says.

Both bills would also prevent "issue ads" -- ads published by the National Rifle Association, the Moral Majority, unions and the like -- from naming a specific candidates within 60 days of an election.

Mr. Miller would also like to see two further provisions that are not in the current bills: another attempt to enforce limits on contributions, and granting free TV time to candidates. "The U.S. owns the air waves. We could force them to give some free time back," he says. "The objective is to get good people into office."

Public policy

Less than four years old, the Public Policy Institute (PPIC) is quoted frequently as a source on information in newspapers and the halls of government.

That's just fine with Mr. Miller. He wants it to produce reports and objective analysis and recommendations that deal with problems and help defuse the vicious partisanship that stalls action in Sacramento. "Our goal is to impact legislation and public policy," he says.

PPIC's first report was on the growing gap between the rich and the poor in California. "It stares you in the face," says Mr. Miller. "The rich are just getting richer and the poor getting poorer. Our study shows the gap is growing across the whole U.S., but it's increasing faster in California than elsewhere."

Has he any recommendations? Not yet. PPIC is still studying the problems so it can understand them better before issuing recommendations. Further, the income gap is also tangled with other problems -- particularly welfare and immigration -- which are also being studied by PPIC. "Before you get intelligent policy, you have to get the facts out," he says. "You need a coordinated, team approach. That's what was missing, and that's what we have now."

Why does he focus on California? Why not the whole country? California is a manageable size to study, and California tends to lead the nation on problems ranging from clean air to affirmative action, Mr. Miller replies. "The rest of the country follows us."

Looking forward

Mr. Miller approaches the future with the positive, can-do attitude of a successful businessman. He's particularly excited about the technological revolution that has caught him and many managers by surprise and upset their predictions.

"The technological revolution really is doing dramatic things to reduce costs," he says. "There seems no limit to the kind of costs you can take out with the technology. I know it's not nearly worked itself out in the auto industry.

"Today literally billions of dollars are locked up in inventory sitting on the lots of dealers. It creates heavy financing costs, obsolescence and rusting out," he says, warming up to a subject he knows intimately. "What we can do now with the auto game is what Dell does with computers. You can go to a dealer and look at it and kick the tires, and after that, get on the Internet and order exactly the kind of car you want -- there are thousands of combinations.

"You'll get a car in 10-14 days; now it take two months," he continues. "That will just take out hundreds of millions of dollars in costs in the way we market cars. If anything will keep profits up, that's it."

On the other hand, global competition, fueled by declining currencies, is tough and getting tougher. Mr. Miller sounds almost grateful for the 1973 oil shock and Japanese competition. Those shook the American auto industry out of complacency to improve quality. "We're almost equal now; they're a little bit ahead of us," he says.

While Mr. Miller has great faith in the promise of technology to trim costs, he has less faith in the ability of management to absorb and utilize the advances. "The bottleneck in the application of technology today is in management, not engineering," he says.

In concluding, Mr. Miller reflects: "As society gets more crowded, you can't go out to the frontier and escape it. There is a role for government, and there is a role for the private sector, and you have to understand that. The drive alone to maximize profits is not the end game."



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